Prices for products sold by Canadian manufacturers, as measured by the Industrial Product Price Index (IPPI), increased 1.4% in November, mainly attributable to higher prices for energy and petroleum products. Prices for raw materials purchased by Canadian manufacturers, as measured by the Raw Materials Price Index (RMPI), rose 5.5%, primarily due to higher prices for crude energy products.

Chart 1
Prices for industrial goods increase

Industrial Product Price Index, monthly change

The IPPI rose 1.4% in November, following a 1.1% increase in October. Of the 21 major commodity groups, 16 were up, 4 were down and 1 was unchanged.

The growth in the IPPI was largely attributable to higher prices for energy and petroleum products (+6.3%). The increase in this product group was mainly the result of higher prices for motor gasoline (+7.9%), light fuel oils (+9.5%) and diesel fuel (+8.6%). This was the fifth consecutive increase in energy and petroleum products and the largest gain since May 2016. The IPPI excluding energy and petroleum products rose 0.5%.

Prices for motorized and recreational vehicles increased 0.7% in November, following a 1.6% gain the previous month. Higher prices for motor vehicle engines and motor vehicle parts (+0.9%), passenger cars and light trucks (+0.4%) and aircraft (+1.4%) were the largest contributors to the increase in this product group. The increase in prices for motorized and recreational vehicles was closely linked to the depreciation of the Canadian dollar relative to the US dollar.

Primary non-ferrous metal products (+1.5%) also contributed to the increase in the IPPI. Higher prices for unwrought precious metals and precious metal alloys (+1.5%) were mainly responsible for the increase in this product group. To a lesser extent, unwrought copper and copper alloys (+1.7%), basic and semi-finished products of aluminum and aluminum alloys (+2.5%) and unwrought aluminum and aluminum alloys (+1.1%) also contributed to the increase in primary non-ferrous metal products.

Chemicals and chemical products (+1.2%) and meat, fish, and dairy products (+1.0%) were among the other product groups that posted higher prices in November.

The increase in chemicals and chemical products was largely attributable to higher prices for petrochemicals (+4.4%). Prices for fresh and frozen pork (+2.8%), fresh and frozen beef and veal (+2.2%) and processed meat products, other meats and animal by-products (+1.2%) were the main contributors to the gain in meat, fish and dairy products.

Some IPPI prices are reported in US dollars and converted to Canadian dollars using the average monthly exchange rate. Consequently, any change in the value of the Canadian dollar relative to the US dollar will affect the level of the index. From October to November, the Canadian dollar depreciated 1.3% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have risen 1.1% instead of 1.4%.

Industrial Product Price Index, 12-month change

The IPPI rose 2.7% over the 12-month period ending in November, following a 1.7% gain in October.

Compared with November 2016, the increase in the IPPI was largely due to higher prices for energy and petroleum products (+18.2%). Motor gasoline (+22.1%), light fuel oils (+20.9%) and diesel fuel (+18.4%) were the main contributors to the increase in this product group. Year over year, the IPPI excluding energy and petroleum products rose 0.4%.

Raw Materials Price Index, monthly change

The RMPI rose 5.5% in November, following a 3.8% increase in October. This was the largest gain in the RMPI since December 2016, when prices rose 6.3%.

Chart 2
Prices for raw materials increase

While prices in all six major commodity groups increased compared with October, the increase in the RMPI was mainly due to higher prices for crude energy products (+10.3%). The gain in this commodity group was largely attributable to higher prices for conventional crude oil (+10.9%), which posted its largest increase since December 2016. The RMPI excluding crude energy products rose 1.8%.

Animals and animal products (+2.6%) also contributed to the increase in the RMPI, but to a lesser extent. Higher prices for live animals (+4.6%), particularly hogs (+7.9%) and cattle and calves (+4.4%) were mainly responsible for the increase in this commodity group.

Prices for metal ores, concentrates and scrap rose 1.4% in November, following a 3.6% increase the previous month.

Raw Materials Price Index, 12-month change

The RMPI rose 14.2% year over year in November, following a 6.6% gain in October.

Compared with November 2016, the increase in the RMPI was mainly due to higher prices for crude energy products (+25.4%), particularly conventional crude oil (+26.7%). Year over year, the RMPI excluding crude energy products rose 6.5%.

Prices for metal ores, concentrates and scrap increased 9.3% compared with November 2016, continuing an upward trend that began in July 2016.

Animals and animal products (+9.2%) also rose compared with November 2016. Prices for hogs (+31.0%) and, to a lesser extent, fish, shellfish and other fishery products (+17.9%) and cattle and calves (+7.2%) were largely responsible for the gain in animals and animal products.

Note to readers

The Industrial Product Price Index (IPPI) and Raw Materials Price Index (RMPI) are available at the Canada level only. Selected commodity groups within the IPPI are also available by region.

With each release, data for the previous six months may have been revised. The indexes are not seasonally adjusted.

The Industrial Product Price Index reflects the prices that producers in Canada receive as the goods leave the plant gate. It does not reflect what the consumer pays. Unlike the Consumer Price Index, the IPPI excludes indirect taxes and all the costs that occur between the time a good leaves the plant and the time the final user takes possession of it, including transportation, wholesale and retail costs.

Canadian producers export many goods. They often indicate their prices in foreign currencies, especially in US dollars, which are then converted into Canadian dollars. In particular, this is the case for motor vehicles, pulp, paper and wood products. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI. However, the conversion into Canadian dollars only reflects how respondents provide their prices. This is not a measure that takes the full effect of exchange rates into account.

The conversion of prices received in US dollars is based on the average monthly exchange rate established by the Bank of Canada and available in CANSIM table 176-0081 (series v111666275). Monthly and annual variations in the exchange rate, as described in the release, are calculated according to the indirect quotation of the exchange rate (for example, CAN$1 = US$X).

The Raw Materials Price Index reflects the prices paid by Canadian manufacturers for key raw materials. Many of those prices are set on the world market. However, as few prices are denominated in foreign currencies, their conversion into Canadian dollars has only a minor effect on the calculation of the RMPI.